how do they do that? to what extent? what if Im spending the whole day chilling on the internet. do they track this?
Always. They might not look too closely at it unless you give them cause to (such as you're visibly goofing off and they're looking for ammunition, or the network flags you for looking at porn), but don't assume that your network traffic is a secret at work.
As for how, they own the network. Network monitoring tools will show them activity. Most of the time they won't look, but don't give them cause to, either.
Yes. Reviewed quarterly
do they categorize employees by porn categories?
It depends. I do remember at Geico the proxy actually made you tick the "I certify this is for business purposes" checkbox whenever you visited Kayak or any travel site. And lots of innocent sites like news were blocked. But that's one fucked up company.
Lol. They dont have anything else to do?